07ASTANA1104, KAZAKHSTAN: ANOTHER DELAY IN PASSING AML LAW

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UNCLAS ASTANA 001104
SIPDIS
STATE FOR INL/AAE (ALTON), INL/C, SCA/CEN (O'MARA)
SIPDIS
E.O. 12958: N/A
TAGS: SNARASECPRELKCORKCRMPRELKZ
SUBJECT: KAZAKHSTAN: ANOTHER DELAY IN PASSING AML LAW
Ref: A) 05 ALMATY 4353, B) 06 ASTANA 689, C) 06 ALMATY 1437
¶1. Summary: The extension of the property legalization period until
August 1 will cause yet another delay in the enactment of the
anti-money laundering and counter terrorism financing law (AML)
currently under consideration in the Kazakhstani Mazhilis (lower
house of parliament). The postponement of the AML legislation is
the third delay in strengthening of the AML regime and the creation
of the Kazakhstani Financial Intelligence Unit. End summary.
-------------------------------------
THREE ROUNDS OF PROPERTY LEGALIZATION
-------------------------------------
¶2. President Nazarbayev signed amendments to the property
legalization law in late March 2007 extending the property amnesty
campaign until August 1 and registration of title until November 1.
The extension was caused by a surge of last-minute filings for
legalization and a concern that the commissions which must process
the claims would have insufficient time to do so. The amendments
also provide an exemption from responsibility for public officers
who legalize their assets within the property amnesty campaign.
¶3. Nazarbayev is reported to have said that the term of property
legalization will not be extended again and this is the last chance
for Kazakhstanis to legalize their property. The value of legalized
property to date is more than $2 billion, which is four times more
than during first wave of legalization in 2001. A total of around
1.4 million people submitted requests for legalization. About 80
decisions of the legalization commission were annulled by the
General Procurator's Office due to violations of the legalization
rules. The Prime Minister directed oblast akims to relieve members
of legalization commissions of their regular duties in order to
allow them to clear the backlog of requests for legalization.
¶4. Legalization of property (and the first delay in AML
legislation) began with the enactment of the Property Legalization
Law on July 5, 2006. The law was to expire at the end of December
2006 but was extended (creating a further delay in AML law) in order
to provide more time for asset owners to register their property.
The assets which were obtained since independence are widely
believed to have been acquired illegally during the privatization
period. The law was to legalize a wide range of property and
assets, including real property, capital assets, movable property,
and securities. The law allows owners to register these assets
without penalty; however, the subjects of legalization must pay a
fee of 10% of the assessed value of the amnestied property. One of
several Property Legalization Commissions must approve all requests
for registration.
¶5. On November 17, 2006, the President signed legislation extending
the Property Legalization act until April 1, 2007. Nazarbayev said
a three-month extension of the legalization period was necessary
because of confusion on how the law was being implemented and the
resulting need to better inform the public (Ref B).
-------------------------
THEN, PERHAPS, AN AML LAW
-------------------------
¶5. Financial Police officials told INL Officer that the extension
of the property legalization law will again delay the enactment of
AML legislation. This is because once the AML law is in force,
attempts to register previously unrecorded assets would be
considered prima facie evidence that some type of financial
malfeasance took place which could put the owner of those assets at
risk of prosecution.
¶6. The AML draft legislation was originally introduced to the
Mazhilis in September 2005 but was immediately delayed by deputies
who claimed the structure of the legislation required further review
(Ref A). Subsequently, during a study tour by members of the
Mazhilis AML Working Group to Copenhagen, post heard concerns about
the powerful role in AML and the FIU accorded to the Procurator
General's Office (Ref C). Now the draft legislation has been
repeatedly delayed by the property legalization campaign.
¶7. Comment: While Post would like to see AML legislation enacted in
order to create the basis for monitoring suspicious transactions and
large cash flows (both concerns in a illegal drug transit country),
it is also important that Kazakhstan complete the property
legalization process in order to preclude a rash of lawsuits to
determine the rightful owners of property that changed hands during
the murky privatization deals of the 1990s. End comment.
ORDWAY

The information recorded on this site has been extracted from http://Wikileaks.org (Kazakhstan) database..

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